Item 2. Management’s Discussion and Analysis
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Understanding Our Financial Information
This Management's Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with our consolidated financial statements and related notes in "Item 1. Financial Statements" of this Form 10-Q, as well as our 2025 Form 10-K. The following discussion includes statements regarding our expectations with respect to our future performance, liquidity, and capital resources. Such statements, along with any other non-historical statements in the discussion, are forward-looking. These forward-looking statements include, without limitation, any statement that may predict, indicate, or imply future results, performance, or achievements and may contain the words "may," "will," "expect," "believe," "should," "plan," "anticipate," and other similar expressions. All of these forward-looking statements are based on estimates and assumptions made by our management that, although believed by us to be reasonable, are inherently uncertain. These forward-looking statements are subject to numerous risks and uncertainties, including, but not limited to, the risks and uncertainties described in "Item 1A. Risk Factors" in our 2025 Form 10-K, as well as those factors listed in other documents we file with the Securities and Exchange Commission (the SEC). We do not assume an obligation to update any forward-looking statement. Our future actual results may differ materially from those contained in or implied by any of the forward-looking statements in this Form 10-Q.
Background
Boise Cascade Company is a building products company headquartered in Boise, Idaho. As used in this Form 10-Q, the terms "Boise Cascade," "we," and "our" refer to Boise Cascade Company and its consolidated subsidiaries. Boise Cascade is a large, integrated building materials distributor and wood products manufacturer with widespread operations throughout the United States (U.S.) and one manufacturing facility in Canada. We have two reportable segments: (i) Building Materials Distribution (BMD), which is a wholesale distributor of building materials; and (ii) Wood Products, which primarily manufactures engineered wood products (EWP) and plywood. Our products are used in the construction of new residential housing, including single-family, multi-family, and manufactured homes, the repair-and-remodeling of existing housing, the construction of light industrial and commercial buildings, and other industrial applications. For more information, see Note 11, Segment Information, of the Condensed Notes to Unaudited Quarterly Consolidated Financial Statements in "Item 1. Financial Statements" of this Form 10-Q.
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Executive Overview
We recorded income from operations of $27.8 million during the three months ended March 31, 2026, compared with income from operations of $54.5 million during the three months ended March 31, 2025. In our BMD segment, income decreased $15.5 million to $32.9 million for the three months ended March 31, 2026, from $48.4 million for the three months ended March 31, 2025. The decrease in segment income was driven by increased selling and distribution expenses of $8.2 million, as well as a $6.5 million gross margin decrease, resulting primarily from lower gross margins on all product lines, particularly EWP. In our Wood Products segment, income decreased $9.2 million to $8.5 million for the three months ended March 31, 2026, from $17.7 million for the three months ended March 31, 2025. The decrease in segment income was primarily due to lower EWP sales prices, as well as higher per-unit EWP conversion costs. These decreases in segment income were offset partially by lower per-unit OSB costs, as well as higher plywood sales volumes and sales prices. These changes are discussed further in "Our Operating Results" below.
We ended first quarter 2026 with $338.7 million of cash and cash equivalents and $395.1 million of undrawn committed bank line availability, for total available liquidity of $733.8 million. We had $452.5 million of outstanding debt at March 31, 2026. We used $138.5 million of cash during the three months ended March 31, 2026, to fund seasonal working capital increases, capital spending, share repurchases, and dividends paid on our common stock. A further description of our cash sources and uses for the three-month comparative periods are discussed in "Liquidity and Capital Resources" below.
Demand for the products we purchase and distribute, as well as the products we manufacture, is closely tied to new residential construction, residential repair-and-remodeling activity, and light commercial construction. Residential construction, particularly new single-family construction, remains a key demand driver for the products we distribute and manufacture. The operating environment during the first quarter of 2026 presented a mix of opportunities and challenges. For much of the quarter, mortgage rates declined to their lowest levels in over three years. However, recent geopolitical turmoil has led to volatility in treasury and mortgage rates alike, casting unpredictability on the remainder of the spring selling season. Consumer sentiment and home affordability challenges persist as the most prominent headwinds to residential construction activity. In addition, home builders are responding to the cautious demand environment with thoughtful approaches to starts, home sizes, location, and inventory. Long-term demand drivers for residential construction, including generational tailwinds and an undersupply of housing units, remain strong, while elevated levels of homeowner equity and an aging U.S. housing stock support robust repair-and-remodel spending and reinforce the industry’s solid fundamentals.
Our distribution business, which purchases and resells a diverse range of products, experiences opportunities for increased sales and margins during periods of rising prices, while periods of declining prices may present challenges. Future product pricing, particularly for commodity products we distribute and manufacture, is expected to remain dynamic, influenced by economic and geopolitical conditions, input costs, industry operating rates, supply disruptions, duties, tariffs, cost and availability of transportation, inventory levels, and seasonal demand patterns. We will continue to monitor end market demand signals and align production rates and inventory stocking positions accordingly.
Factors That Affect Our Operating Results and Trends
Our results of operations and financial performance are influenced by a variety of factors, including the following:
• the commodity nature of a portion of our products and their price movements, which are driven largely by general economic conditions, industry capacity and operating rates, industry cycles that affect supply and demand, and net import and export activity;
• the highly competitive nature of our industry;
• declines in demand for our products due to competing technologies or materials, as well as changes in building code provisions;
• disruptions to information systems used to process and store customer, employee, and vendor information, as well as the technology that manages our operations and other business processes;
• material disruptions and/or major equipment failure at our manufacturing facilities;
• declining demand for residual byproducts, particularly wood chips generated in our manufacturing operations;
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• labor disruptions, shortages of skilled and technical labor, or increased labor costs;
• product shortages, loss of key suppliers, and our dependence on third-party suppliers and manufacturers;
• the cost and availability of third-party transportation services used to deliver the goods we distribute and manufacture, as well as our raw materials;
• cost and availability of raw materials, particularly wood fiber;
• the need to successfully formulate and implement succession plans for key members of our management team;
• our ability to execute our organic growth and acquisition strategies efficiently and effectively;
• failures or delays with new or existing technology systems and software platforms;
• our ability to successfully pursue our long-term growth strategy related to innovation and digital technology;
• concentration of our sales among a relatively small group of customers, as well as the financial condition and creditworthiness of our customers;
• impairment of our long-lived assets, goodwill, and/or intangible assets;
• substantial ongoing capital investment costs, including those associated with organic growth and acquisitions, and the difficulty in offsetting fixed costs related to those investments;
• our indebtedness, including the possibility that we may not generate sufficient cash flows from operations or that future borrowings may not be available in amounts sufficient to fulfill our debt obligations and fund other liquidity needs;
• restrictive covenants contained in our debt agreements;
• changes in or failure to comply with laws and regulations;
• changes in foreign trade policy, including the imposition of tariffs;
• compliance with data privacy and security laws and regulations;
• the impacts of climate change and related legislative and regulatory responses intended to reduce climate change;
• cost of compliance with government regulations, in particular, environmental regulations;
• exposure to product liability, product warranty, casualty, construction defect, and other claims;
• fluctuations in the market for our equity; and
• the other factors described in "Item 1A. Risk Factors" in our 2025 Form 10-K.
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Our Operating Results
The following tables set forth our operating results in dollars and as a percentage of sales for the three months ended March 31, 2026 and 2025:
Three Months Ended
March 31
2026 2025
(millions)
Sales $ 1,498.6 $ 1,536.5
Costs and expenses
Materials, labor, and other operating expenses (excluding depreciation) 1,255.1 1,276.2
Depreciation and amortization 39.1 37.1
Selling and distribution expenses 150.4 143.6
General and administrative expenses 26.3 25.0
Other (income) expense, net — —
1,470.8 1,482.0
Income from operations $ 27.8 $ 54.5
(percentage of sales)
Sales 100.0 % 100.0 %
Costs and expenses
Materials, labor, and other operating expenses (excluding depreciation) 83.7 % 83.1 %
Depreciation and amortization 2.6 2.4
Selling and distribution expenses 10.0 9.3
General and administrative expenses 1.8 1.6
Other (income) expense, net — —
98.1 % 96.5 %
Income from operations 1.9 % 3.5 %
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Sales Volumes and Prices
Set forth below are historical U.S. housing starts data, sales mix and gross margin information for our BMD segment, and segment sales volumes and average net selling prices for the principal products sold by our Wood Products segment for the three months ended March 31, 2026 and 2025:
Three Months Ended
March 31
2026 2025
(thousands)
U.S. Housing Starts (a)
Single-family 216.3 228.8
Multi-family 106.1 89.0
322.4 317.8
(thousands)
Segment Sales
Building Materials Distribution $ 1,388,948 $ 1,407,116
Wood Products 398,204 415,845
Intersegment eliminations (288,538) (286,467)
Total sales $ 1,498,614 $ 1,536,494
(percentage of BMD sales)
Building Materials Distribution
Product Line Sales
General line 45.0 % 42.6 %
Commodity 35.5 % 36.7 %
Engineered wood products 19.5 % 20.7 %
Gross margin percentage (b) 14.4 % 14.7 %
Wood Products (millions)
Sales Volumes
Laminated veneer lumber (LVL) (cubic feet) 4.6 4.6
I-joists (equivalent lineal feet) 52 55
Plywood (sq. ft.) (3/8" basis) 373 363
Wood Products (dollars per unit)
Average Net Selling Prices
LVL (cubic foot) $ 24.22 $ 26.09
I-joists (1,000 equivalent lineal feet) 1,700 1,833
Plywood (1,000 sq. ft.) (3/8" basis) 343 341
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(a) Actual U.S. housing starts as reported by the U.S. Census Bureau.
(b) We define gross margin as "Sales" less "Materials, labor, and other operating expenses (excluding depreciation)." Substantially all costs included in "Materials, labor, and other operating expenses (excluding depreciation)" for our BMD segment are for inventory purchased for resale. Gross margin percentage is gross margin as a percentage of segment sales.
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Sales
For the three months ended March 31, 2026, total sales decreased $37.9 million, or 2%, to $1,498.6 million from $1,536.5 million during the three months ended March 31, 2025. As described below, the decrease in sales was driven by the changes in sales prices and volumes for the products we distribute and manufacture with single-family residential construction activity being the key demand driver for our sales. In first quarter 2026, total U.S. housing starts increased 1% while single-family housing starts decreased 5%, compared with the same period in 2025. Average composite panel and average composite lumber prices for the three months ended March 31, 2026 were 15% and 5% lower, respectively, than in the same period in the prior year, as reflected by Random Lengths composite panel and composite lumber pricing.
Building Materials Distribution. Sales decreased $18.2 million, or 1%, to $1,388.9 million for the three months ended March 31, 2026, from $1,407.1 million for the three months ended March 31, 2025. Compared with the same quarter in the prior year, the overall decrease in sales was driven by net sales price decreases of 3%, offset partially by net sales volume increases of 2%. By product line, general line product sales increased 4%, or $25.4 million; commodity sales decreased 5%, or $24.1 million; and EWP sales (substantially all of which are sourced through our Wood Products segment) decreased 7%, or $19.5 million.
Wood Products. Sales, including sales to our BMD segment, decreased $17.6 million, or 4%, to $398.2 million for the three months ended March 31, 2026, from $415.8 million for the three months ended March 31, 2025. The decrease in sales was driven by lower sales prices of 7% for both LVL and I-joists (collectively referred to as EWP), resulting in decreased sales of $8.5 million and $6.9 million, respectively. Additionally, sales volumes for I-joists and LVL decreased by 5% and 1%, respectively, resulting in decreased sales of $5.1 million and $1.4 million, respectively. These decreases were offset partially by higher plywood sales volumes and sales prices of 3% and 1%, respectively, resulting in increased sales of $4.5 million.
Costs and Expenses
Materials, labor, and other operating expenses (excluding depreciation) decreased $21.1 million, or 2%, to $1,255.1 million for the three months ended March 31, 2026, compared with $1,276.2 million during the same period in the prior year. In BMD, the decrease in materials, labor, and other operating expenses was driven by lower purchased materials costs as a result of lower prices, offset partially by increased sales volumes, compared with first quarter 2025. However, materials, labor, and other operating expenses as a percentage of sales (MLO rate) in our BMD segment increased 30 basis points, driven by lower margin percentages on general line and EWP products. In our Wood Products segment, materials, labor, and other operating expenses decreased due to reduced purchases of external veneer for our Alexandria EWP mill, as operations resumed at our Oakdale veneer and plywood mill following planned downtime to complete significant mill modernization projects in 2025. Additionally, lower per-unit costs of OSB (used in the manufacture of I-joists), lower other manufacturing costs, and decreased EWP sales volumes contributed to the decrease in MLO. These decreases were offset partially by higher labor costs compared with first quarter 2025. However, the MLO rate in our Wood Products segment increased by 150 basis points, primarily as the result of lower EWP sales prices and volumes, which resulted in decreased leveraging of costs.
Depreciation and amortization expense increased $1.9 million, or 5%, to $39.1 million for the three months ended March 31, 2026, compared with $37.1 million during the same period in the prior year. The increase was primarily due to acquisition and organic growth in our BMD segment and the recent investments at our Oakdale veneer and plywood mill.
Selling and distribution expenses increased $6.8 million, or 5%, to $150.4 million for the three months ended March 31, 2026, compared with $143.6 million during the same period in the prior year. The increase was due to higher employee-related expenses of $4.9 million, as well as higher shipping and handling costs of $2.3 million.
General and administrative expenses increased $1.3 million, or 5%, to $26.3 million for the three months ended March 31, 2026, compared with $25.0 million for the same period in the prior year. The increase was due primarily to higher employee-related expenses.
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Income From Operations
Income from operations decreased $26.7 million to $27.8 million for the three months ended March 31, 2026, compared with $54.5 million for the three months ended March 31, 2025.
Building Materials Distribution. Segment income decreased $15.5 million to $32.9 million for the three months ended March 31, 2026, from $48.4 million for the three months ended March 31, 2025. The decrease in segment income was driven by increased selling and distribution expenses of $8.2 million, as well as a $6.5 million gross margin decrease, resulting from lower gross margins on all product lines, particularly EWP .
Wood Products. Segment income decreased $9.2 million to $8.5 million for the three months ended March 31, 2026, from $17.7 million for the three months ended March 31, 2025. The decrease in segment income was primarily due to lower EWP sales prices, as well as higher per-unit EWP conversion costs. These decreases in segment income were offset partially by lower per-unit OSB costs, as well as higher plywood sales volumes and sales prices. Additionally, operations resumed at our Oakdale veneer and plywood mill following planned downtime in 2025 to complete significant mill modernization projects, which provided a favorable impact on per-unit conversion costs.
Corporate. Unallocated corporate expenses increased $2.0 million to $13.6 million for the three months ended March 31, 2026, from $11.6 million for the same period in the prior year. The increase was primarily due to the absorption of approximately $1.8 million of estimated insurance losses related to a fire at our Florien plywood facility in first quarter 2026, in accordance with our self-insured risk retention program.
Other
Interest Income. Interest income decreased $2.6 million to $2.9 million for the three months ended March 31, 2026, from $5.5 million for the same period in the prior year. The decrease was due primarily to lower average balances of cash equivalents, as well as lower interest rates.
Income Tax Provision
For the three months ended March 31, 2026 and 2025, we recorded $6.6 million and $13.8 million, respectively, of income tax expense and had an effective tax rate of 27.0% and 25.5%, respectively. For both periods, the primary reason for the difference between the federal statutory income tax rate of 21% and the effective tax rate was the effect of state taxes.
Liquidity and Capital Resources
We ended first quarter 2026 with $338.7 million of cash and cash equivalents and $452.5 million of debt. At March 31, 2026, we had $733.8 million of available liquidity (cash and cash equivalents and undrawn committed bank line availability). Our cash and cash equivalents decreased by $138.5 million during the three months ended March 31, 2026, as we used cash to fund seasonal working capital increases, capital spending, share repurchases, and dividends paid on our common stock. Further descriptions of our cash sources and uses for the three-month comparative periods are noted below.
We believe that our cash flows from operations, combined with our current cash levels and available borrowing capacity, will be adequate to fund debt service requirements and provide cash, as required, to support our ongoing operations, capital expenditures, lease obligations, working capital, income tax payments, and to pay cash dividends to holders of our common stock over the next 12 months. We expect to fund our seasonal and intra-month working capital requirements in 2026 from cash on hand and, if necessary, borrowings under our revolving credit facility.
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Sources and Uses of Cash
We generate cash primarily from sales of our products, as well as short-term and long-term borrowings. Our primary uses of cash are for expenses related to the distribution and manufacture of building products, including inventory purchased for resale, wood fiber, labor, energy, and glues and resins. In addition to paying for ongoing operating costs, we use cash to invest in our business, service our debt and lease obligations, and return cash to our stockholders through dividends or common stock repurchases. Below is a discussion of our sources and uses of cash for operating activities, investing activities, and financing activities.
Three Months Ended
March 31
2026 2025
(thousands)
Net cash used for operations $ (15,982) $ (28,476)
Net cash used for investment (39,473) (52,225)
Net cash used for financing (83,093) (70,778)
Operating Activities
For the three months ended March 31, 2026, our operating activities used $16.0 million of cash, compared with $28.5 million of cash used in the same period in 2025. The $12.5 million decrease in cash used for operations was due primarily to a lesser year-over-year increase in working capital, offset partially by a decrease in income from operations. Working capital increased $80.5 million during the three months ended March 31, 2026, compared with a $123.7 million increase for the same period in the prior year. See "Our Operating Results" in this Management's Discussion and Analysis of Financial Condition and Results of Operations for more information related to factors affecting our operating results.
The increase in working capital during both periods was primarily attributable to higher receivables and inventories, offset by an increase in accounts payable and accrued liabilities. The increase in receivables in both periods primarily reflect increased sales of approximately 26% and 18%, comparing sales for the months of March 2026 and 2025 with sales for the months of December 2025 and 2024, respectively. Inventories increased during the three months ended March 31, 2026 in preparation for the spring building season, as well as participation in certain BMD vendors' early-buy programs. These higher inventory levels were offset partially by the use of log inventory to support manufacturing activity in our Wood Products segment. Inventories increased during the three months ended March 31, 2025 in preparation for the spring building season, as well as participation in certain BMD vendors' early-buy programs. During both the three months ended March 31, 2026 and 2025, the increase in accounts payable and accrued liabilities was primarily related to the increase in inventories and extended terms offered by certain BMD vendors, offset partially by employee incentive compensation payouts made during the quarter and lower accrued rebates.
Investment Activities
During the three months ended March 31, 2026 and 2025, we used $39.8 million and $53.2 million, respectively, of cash for purchases of property and equipment, including business improvement and efficiency projects, replacement projects, and ongoing environmental compliance.
Excluding potential acquisitions, we expect capital expenditures in 2026 to total approximately $150 million to $170 million. We expect our capital spending in 2026 will be for BMD growth projects, business improvement and efficiency projects, replacement projects, and ongoing environmental compliance. This level of capital expenditures could increase or decrease as a result of several factors, including efforts to further accelerate organic growth, exercise of lease purchase options, our financial results, future economic conditions, availability of engineering and construction resources, and timing and availability of equipment purchases.
Financing Activities
During the three months ended March 31, 2026, our financing activities used $83.1 million of cash, including $65.5 million for the repurchase of 830,751 shares of our common stock, $10.4 million in common stock dividend payments, and $6.2 million of tax withholding payments on stock-based awards. During the three months ended March 31, 2026, non-cash investing and financing activities included the issuance of a $2.5 million promissory note to partially finance a property purchase. During the three months ended March 31, 2026, we did not borrow under our revolving credit facility. At March 31, 2026, we had $50.0 million of borrowings outstanding under the revolving credit facility.
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During the three months ended March 31, 2025, our financing activities used $70.8 million of cash, including $53.9 million for the repurchase of 482,700 shares of our common stock, $10.5 million in common stock dividend payments, and $5.9 million of tax withholding payments on stock-based awards. During the three months ended March 31, 2025, we did not borrow under our asset-based revolving credit facility.
For more information related to our debt transactions and structure, our dividend policy, and our stock repurchase program, see the discussion in Note 6, Debt, and Note 9, Stockholders' Equity, respectively, of the Condensed Notes to Unaudited Quarterly Consolidated Financial Statements in "Item 1. Financial Statements" of this Form 10-Q.
Other Material Cash Requirements
For information about other material cash requirements, see Liquidity and Capital Resources in "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" in our 2025 Form 10-K. As of March 31, 2026, there have been no material changes in other material cash requirements outside the ordinary course of business since December 31, 2025.
Guarantees
Note 8, Debt, and Note 16, Commitments, Legal Proceedings and Contingencies, and Guarantees, of the Notes to Consolidated Financial Statements in "Item 8. Financial Statements and Supplementary Data" in our 2025 Form 10-K describe the nature of our guarantees, including the approximate terms of the guarantees, how the guarantees arose, the events or circumstances that would require us to perform under the guarantees, and the maximum potential undiscounted amounts of future payments we could be required to make. As of March 31, 2026, there have been no material changes to the guarantees disclosed in our 2025 Form 10-K.
Seasonal Influences
We are exposed to fluctuations in quarterly sales volumes and expenses due to seasonal factors impacting the level of construction activity. These seasonal factors are common in the building products industry. Seasonal changes in levels of building activity affect our building products businesses, which are dependent on housing starts, repair-and-remodeling activities, and light commercial construction activities. Demand typically rises in the spring and summer months as favorable weather and increased building and remodeling projects boost sales volumes. In contrast, the winter months during the first and fourth quarters generally bring lower sales due to reduced construction activity and higher operating costs, particularly for energy. We also adjust our working capital ahead of the peak building season to ensure product availability. These seasonal trends impact our sales, expenses and operational planning throughout the year.
Employees
As of April 26, 2026, we had approximately 7,660 employees. Approximately 17% of these employees work pursuant to collective bargaining agreements. As of April 26, 2026, we had ten collective bargaining agreements. One agreement covering approximately 70 employees at our Canadian EWP facility is set to expire on December 31, 2026. The terms and conditions of this agreement will remain in effect after expiration, pending negotiation of a new agreement.
We may not be able to renew this agreement or may renew it on terms that are less favorable to us than the current agreement. If any of these agreements are not renewed or extended upon their termination, or additional collective bargaining agreements are formed, we could experience a material labor disruption, strike, or significantly increased labor costs at one or more of our facilities, either in the course of negotiations of a labor agreement or otherwise. Labor disruptions or shortages could prevent us from meeting customer demands or result in increased costs, thereby reducing our sales and profitability.
Disclosures of Financial Market Risks
In the normal course of business, we are exposed to financial risks such as changes in commodity prices, interest rates, and foreign currency exchange rates. As of March 31, 2026, there have been no material changes to financial market risks disclosed in our 2025 Form 10-K.
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Environmental
As of March 31, 2026, there have been no material changes to environmental issues disclosed in our 2025 Form 10-K. For additional information, see Environmental in "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" in our 2025 Form 10-K.
Critical Accounting Estimates
Critical accounting estimates are those that are most important to the portrayal of our financial condition and results. These estimates require management's most difficult, subjective, or complex judgments, often as a result of the need to estimate matters that are inherently uncertain. We review the development, selection, and disclosure of our critical accounting estimates with the Audit Committee of our board of directors. For information about critical accounting estimates, see Critical Accounting Estimates in "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" in our 2025 Form 10-K. At March 31, 2026, there have been no material changes to our critical accounting estimates from those disclosed in our 2025 Form 10-K.
New and Recently Adopted Accounting Standards
For information related to new and recently adopted accounting standards, see New and Recently Adopted Accounting Standards in Note 2, Summary of Significant Accounting Policies, of the Condensed Notes to Unaudited Quarterly Consolidated Financial Statements in "Item 1. Financial Statements" in this Form 10-Q.